How the financial aspects of a divorce are handled plays a significant part in the individual lives of the parties as each person moves forward to a new beginning. The division of property is generally understood by Indiana residents as meaning assets, but it also includes debts and obligations. Sometimes lost in the big picture is the impact that property division can have on the ex-spouses’ credit post-divorce, but it is a mistake to ignore the potential consequences.
A seminal consideration is that a person’s status as single or married is a non-factor in establishing a credit score, and consequently, a divorce by itself does nothing to change that fact. However, financial experts caution that after a divorce, a creditor may look to either of the ex-spouses for payment on a debt. Although the final divorce order will assign specific debts to one of the parties just as assets can be assigned, the court order does nothing to alter the original creditor agreement. If the original debt is considered as a joint account, one party’s obligation under the divorce decree to pay does not relieve the other’s obligation to pay upon a default by the first party.
One remedy is to pay off all joint obligations with community assets and start anew with individual credit, but this is not practical for most people. This is especially true for large-ticket items, such as automobiles and the family home. It is important to close joint accounts where possible and be sure that any new accounts are in one individual’s name only.
Divorce issues can be complex. An experienced family law attorney may offer counsel through these difficult times.